TECHNOLOGY - Price cut stirs iPhone questions - The move may indicate sluggish sales of the high-end model. Steve Jobs also unveils an iPod with wireless capability.

Apple Inc. slashed the price of its high-end iPhone by $200 Wednesday, sparking investor concerns that sales had stagnated since the gadget's much-hyped launch only two months ago.

Apple's shares fell more than 5% to $136.76.

But Chief Executive Steve Jobs said Apple was merely stepping up the pressure on its wireless competitors, using the price cut to try to "put iPhones in a lot of stockings this holiday season."

Jobs said the 8-gigabyte iPhone would cost $399, down from $599. He also announced plans to phase out the 4-gigabyte version, which analysts took as a sign that the model wasn't selling well.

"It's Christmas in September for people who don't have iPhones," said Samir Bhavnani, research director at Current Analysis West, a research group based in San Diego. "But it could indicate that sales are flat."

Despite the price cut, Jobs didn't raise his iPhone sales forecast. He said the company remained on track to sell its millionth iPhone, which combines a cellphone, Internet device and digital entertainment player, by the end of this month.

Apple has said it expected to sell 10 million iPhones by 2008 -- about as many iPods as it sold in the last quarter alone.

At a media event at the Moscone Center in downtown San Francisco, Jobs also unveiled an iPod that connects to wireless networks. The iPod Touch is a touch-screen device that lets anyone in range of a Wi-Fi hot spot buy music or surf the Web. The version with 8 gigabytes of storage will cost $299 and the 16-gigabyte version $399.

Taken together, the iPhone price cut and the new iPod offered strong signs of the company's growing ambition to tackle the wireless market.

"Apple wants to be more of a legitimate player in the mobile market than people thought," said Gene Munster, senior research analyst for Piper Jaffray. The price cut "will hurt them in profitability for the first few quarters, but it will boost the demand for the iPhone."

Apple is expanding the consumer market for hand-held devices that allow Web browsing on the go, said John Spooner, senior analyst at Technology Business Research in Hampton, N.H.

The new iPod "significantly increases Apple's reach," he said.

Even before the iPhone launched on June 29, critics said it was too expensive, especially with cellphone prices dropping.